David Lipschitz Presentation to the Inkatha Freedom Party Caucus

Presentation: 31st October 2013

20 minute presentation, then Q&A.

Isn’t nature abundant?

Everything we have comes from the sun. Imagine if we could tap the
sun’s energy directly instead of via polluting coal, oil, gas and nuclear
energy, which represent millions of years of the sun’s stored reserves.
Old, Dead Energy; whereas now we can tap New Alive, Vibrant, Energy!

And imagine if one could do this at the point where the people own and
control the means of production? Real public ownership without the
possibility of corruption and cleptocracy would be a reality.

And the IFP can give this to South Africa!

Fortunately in the age of information technology and communication this

is now a reality. In this 20-minute talk, I’d like to discuss this new “flat” 1
world, where everyone can compete and share and find work, even if
they live in rural areas.

John and I are here today because we’d like the IFP to give us a task,
helping the IFP help make South Africa great by allowing us to help you
create the IFP Development Program. It has taken us 6 years of R&D and
3 years to get a meeting and we thank you for agreeing to see us today.

The theme of this talk is that Electricity is the key enabler for a
modern economy. The other requirements are labour and resources.
South Africa has labour and resources, but not enough electricity.

Without electricity2 nothing else is possible.

Over the next 20 years the South African ANC and DA Government will
spend R2 Trillion Rand (Two Thousand Billion Rand) of tax payers
money on their new Integrated Resource Plan IRP Power Station Build
and supporting Infrastructure like Electricity Grid and Railway to transport
coal and R100 Billion for Coal Mine Developments. This money will be paid
off over the next 40 years, so some taxpayers are on the hook for
repayments for their entire lives!

1
Thomas Friedman in “Hot, Flat and Crowded”
2
Actually one needs good agricultural land, water, electricity and the political will for
growth and for “everything” one wants to do in the 21 st Century
 2

This money is being borrowed and will cost each South African taxpayer
R9,000 per month in after tax money just to pay for the build, even
before this cash strapped housewife can even buy electricity! Looking at
this another way, this R2 Trillion is being spent so that another 11 million
people can be employed in South Africa by 20303. Each of these 11 million
people will owe R182,000 the day they get a job and will need to pay
R1,800 of their after tax income for 20 years just to service this debt!

Is there a better way? I’ve spent the past 6 years and R4 million
researching this possibility, speaking at many different kinds of
conferences about electricity, energy efficiency, how people can interact
with the grid; I’ve read widely, spoken to hundreds of experts in this field;
and in 2009 I did a formal Renewable Energy course in the USA and wrote
a Renewable Energy exam; and I have a plan which can save South Africa
billions, get us moving as an economy faster and sustainably and all I
truly want is to be a part of this New New South Africa, helping my fellow
man reduce their costs, both financial costs, and the cost mankind is
having on our environment: land; sea; and air.

I come to you today to discuss opportunities for sharing between

government and the people and especially for taking care of the middle
class, the people who pay the majority of taxes in this country. My main
ambition is to reduce my cost of living, both financially and on the habitat
where I live, planet earth and especially on mother nature who nurtures
and supports us being able to live happy, healthy and content lives on our
abundant planet.

The IFP could become the party of all the people, the developers,
the poor and the taxpayers, the middle class, the class of people which
is growing as more and more formerly disadvantaged people join it,
but today the middle class is being squeezed financially and is this good
for the long term health of our beloved country?

The National Planning Commission wants an Active Citizenry, Effective

Government working with the people, Strong Leadership in all parts of
society. I see myself as an Active Citizen, someone who takes an Active
interest in his society. But our ANC and DA governments don’t interact
with their people. They are more inwardly focused on themselves and
outwardly focused on “the poor”. They have forgotten that there are
taxpayers who pay for everything they do. And these taxpayers are happy
to pay to recompense Formerly Disadvantaged People, but not if most of
the money is really going to fancy houses, fancy cars, self-
aggrandizement, and first class travel.

The government should be our elected representatives, carrying out

the will of the people.

3
National Planning Commission Report http://npconline.co.za/
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The Inkatha symbol’s circular shape4 shows the oneness of our nation
and the strength we get by working together to lift our heavy
burden. Inkatha’s philosophy of Ubuntu5 is defined as the “art of being
a human being”. A more comprehensive definition is: “Ubuntu is an
ancient African worldview based on the primary values of intense
humanness, caring, sharing, respect, compassion and associated values,
ensuring a happy and qualitative human community life in the spirit of
family.”

Prince Buthelezi talks about communalism6. “I say communalism,

because in African7 society we share things.”

I’ve read the IFP’s policy documents and recent speeches and I can see
that the IFP supports gas mining in the Karoo commonly known as
Fracking; it supports Nuclear; it supports the massive coal roll-outs. And
what about the tons of nuclear waste stored at Koeberg? And what about
Acid Mine Drainage from Coal Mining in the Orange River? Surely there is
a better way which doesn’t need to destroy our pristine Karoo and our
water resources and which doesn’t need to use masses of borrowed
money to build out of date coal and nuclear power stations.

And how much has the global oil price decreased since these vast fracked
gas resources have been found in the USA? Not a cent! Why? Because
Fracking relies on high oil prices to be viable! There must be a better way
that keeps nature natural, whilst decreasing our cost of living, whilst
sustainably increasing our growth.

I should note that the IFP, DA and ANC all support Mining as a
philosophy for South Africa going forward. However, the world’s strongest
economies are those that import raw materials, turn them into finished
goods and export finished goods. At the moment, a lack of electricity is
causing South Africa to export Raw Materials like Coal, Platinum, Bauxite
and Iron Ore at low prices to Australia, China, and others, who turn this
into Catalytic Converters, Aluminium and Steel and make cars and other
products, and then we import these cars and other products for high
prices. The beneficiation is offshore. The profit is offshore. The jobs are
offshore. The local population doesn’t benefit. South Africa’s balance of
payments is worse and therefore our local fuel price and other prices are
higher than they should be and we have very high inflation.

4
http://www.ifp.org.za/History/history.htm
5
Quotes from
http://www.topkinisis.com/conference/CCEAM/wib/index/outline/PDF/BROODRYK
%20Johann.pdf Bhengu, 1996: 10; Broodryk, 2002:56
6
Usuthu, Page 44
7
I have changed the word “Black” to “African” in this quote from Page 44 of Usuthu, as on
Page 45 of Usuthu, Prince Buthelezi says that whites are also Africans and in any case the
IFP includes all cultures, all races, and all religions, the bedrock of Inkatha philosophy.
 4

From this policy I can see that the ANC, DA and IFP are the parties of
waiting and blaming! Waiting for the future whilst blaming the past. It
will take 12 years for gas to be successfully extracted from the Karoo, and
pipelines will be built to Coega to export this gas, as South Africa doesn’t
have a gas pipeline network. Perhaps some of this gas will find its way
into Gas Fired Power Stations and Peaking Power Stations, but we’ll need
to wait 12 years for this to happen: 2025. The same wait for Nuclear.
Assuming the government gives the go ahead for Nuclear, we will need to
wait until 2025 before the first new reactors are online.

* And in the meantime we are short of electricity now!!

And one should note that only governments can build nuclear power
plants and that if you read the small print in your homeowner insurance
policies you will see that nuclear accidents and nuclear radiation is
specifically excluded. The day that insurance companies finally insure
against nuclear risks is the day I start thinking that perhaps nuclear has a
place in our future!

Regarding policy, the IFP, like the other parties has Mining and Energy
lumped together, but they should be in separate ministries. Mining
involves taking stuff out of the ground, but New Energy involves
extracting energy above the ground and from the sea. These ministries
should be separated as quickly as possible so that they can go about their
businesses effectively.

I should note that many times I hear that South Africa’s Energy Policy is
bad, yet the 1998 White Paper Policy Document on Energy and the 2003
White Paper Policy Document on Renewable Energy call for 30% of the
Grid to be in Private Ownership by 2010, call for Interaction between End
Users and the grid, Feed In Tariffs, etc. The policy is great; why isn’t it
being implemented?

In order to simply Parallel Feed the Grid with electricity in South Africa,
one needs to obey 15 Laws, 10 Standards and fill in a number of
documents. With parallel feed, one is simply reducing their load by
approximately 1/3rd and is not exporting electricity into the grid.

In the USA there are 2 Laws, 3 Standards and 1 document. At least 26

things to do in South Africa; only 6 in America. And in South Africa all this
does is allow one to Parallel Feed. In the USA and other countries, one can
Reverse Feed the grid. More waiting and blaming!

And new legislation in South Africa wants to limit the amount of electricity
that can be produced to 15% of the peak demand. Not even 15% of the
total kWh requirement! And certainly designed to keep Renewable Energy
as a small factor in the total IRP going forward. This to keep government
rich at the expense of the taxpayer.
 5

Eskom is a monopoly. Monopolies don’t want competition. Hence Eskom

have put so many laws in place to prevent the adoption of the very good
policy. This also happened in Italy and Italy’s current recession is proof of
what can go wrong when Law doesn’t support Policy. Germany has great
Law supporting similar Policy to Italy and South Africa. And Germany is
today the world’s leader in New Energy, with over 370,000 jobs in this
industry.

Eskom wants to reintroduce RED’s, Regional Electricity Distributors. Why?

Because it wants to absorb all the electricity income that currently sits in
municipalities? Why? Because the ANC wants this particular pot of gold.
Like e-tolls, this will simply move the tax money into central government,
whilst leaving the local government without enough money to run its
operations. The Cities and Provinces really need to get their acts together
before this happens. One way is to have their own enabling electricity
environment.

Cities like the City of Cape Town and Provinces like the Western Cape
and Natal don’t want their pot of gold, i.e. electricity income to go down,
but electricity is needed to grow the economy, and if the economy
grows, taxes will go up quickly. I believe that South Africa should be
growing as fast as China, i.e. 10% after inflation per annum. South Africa
needs to grow sustainably at 5% per annum to create new jobs. At its
current 1% growth it will continue to shed jobs, and be the 37 th fastest
growing country8 in Africa.

If South Africa grows at 10% per annum in real terms, ie excluding

inflation, then it will add R300 billion to its GDP. The government
represents 1/3rd of the economy; therefore the government will get R100
billion of this. This is three times more than the government can get from
all forms of taxation, like e-tolls, carbon taxes, high electricity prices, high
water prices, high transport taxes, etc. All it takes is electricity. It also
means that each government minister can have their own private jet so
that more work can be done and there will still be billions of change. All
the monies needed for outstanding hospitals, schools, etc, will be collected
each year. Imagine what we can do with this money and growth,
especially if it is sustainable, and especially if it makes South Africa,
Africa’s leader in New Electricity Generation, consulting and selling to the
world’s biggest market in 10 years time, Africa!

The current government is taxing the ability of the country to grow

instead of creating an enabling environment and collecting tax to pay
for infrastructure and free basic electricity, etc, from money it does not
need to borrow. Imagine how quickly the poor’s needs will be addressed if
the economy grows at 10% per annum sustainably. And imagine how the
middle class’s needs will be addressed. And the rich!

8
http://mypowerstation-sa.blogspot.com/2013/09/creating-jobs-by-solving-south-
africas.html
 6

Electricity supply is growing worldwide at an average of 3.6% per

annum. At this rate South Africa should already have 80 GW of electricity,
but it has about 40 GW, the same as it was 20 years ago! Kusile and
Medupi will add about 10 GW, but about 30% of this is lost in
transmission9, so we can really think of a net 7 GW being added, and then
in the early 2020’s 10 GW of “end of life” power stations will be switched
off, so South Africa won’t be better off, even after spending R250 billion!

In any case in 20 years time South Africa’s electricity supply should be

160 GW, and this far exceeds the IRP’s forecasts using Coal, Nuclear, and
Gas Energy.

There must be a better way!

Recent speeches by Prince Buthelezi have outlined the billions of

waste by government, including overspending, spending on
consultants, corruption and other mismanagement.

As examples, Kusile and Medupi were costed at R79 billion each. They are
currently budgeted to cost R125 billion each and they are at least 18
months behind schedule. Governments worldwide have shown that they
cannot manage these huge projects. A better way is millions of small
projects, easy to manage and where the money doesn’t need to be
borrowed.

Government gets its advice from Expert Consultants, but who do these
Expert Consultants represent? South Africa? Its citizens? Or the suppliers
who supply the equipment? We should be specifying what we need, not
what out of date suppliers can supply! Europe, the USA and China are
installing New Energy as fast as possible. China will install more
Renewable Energy this year than South Africa’s entire capacity. Yet the
ANC and DA say that Renewable Energy can’t solve South Africa’s
problems.

So I believe we should be using local expertise from thousands of local

Active Citizens who understand water, electricity, the environment, and
other facets of South Africa. This expertise should be used to draw up
requirements analyses and then one can call in local engineers and
scientists to come up with solutions that match these local requirements.
As it is government spends Billions on Consultants and then sends out
these documents for Active Citizens to comment on in any case, why not
do this the other way around?

Lets go back to Ubuntu and to the Zulu warrior. In my opinion the

modern Zulu Warrior is the Active Citizen beating the drum of South
Africa, concerned for its welfare and future, especially for reducing its cost
of living for ourselves and for our natural environment.

9
Base Load Power Stations have to run at 15% spare capacity to keep the grid stable and
10% of the electricity is wasted over the long power distribution lines in South Africa. Then
there is also waste on the consumer’s side.
 7

For every Billion Rand that the South African government wastes, 6,000
middle class houses can be turned into Power Stations. These
Community Power Stations are able to instantaneously reduce their power
consumption; and they are able to supply the grid with power at peak
times; and they are able to interact with the Electricity Grid.

6,000 houses represents the whole of Milnerton Central, Milnerton Ridge,

Sunset Beach, Royal Ascot, and other parts of Milnerton.

A middle class family spending R1,900 per month on electricity could be

spending R1,600 per month on electricity. This is a R300 per month
saving in electricity for these households. And this money would not
need to be borrowed by government. Finance and leasing
companies from all over the world are already in South Africa ready to
lend this money in leasing schemes allowing homeowners to collectively
become Power Stations. I call these Power Stations Community Power
Stations, run by Co-operatives, sharing with government.

And R96 billion wasted at Kusile and Medupi plus R100 billion wasted over
the past few years on consultants and mismanagement means that 1.1
million houses could already have been turned into power stations.

And imagine the job creation: 2 million heat pumps or solar water
heaters, 2 million inverters; 16 million batteries; 40 million solar panels.
And this just for the first 2 million middle class houses. Although this
won’t appear to be for the poor, it will actually be for the poor as the 11
million jobs that need to be created over the next 20 years will be created
as the middle class become power stations interacting with the grid.

Government keeps saying that Renewable Energy is not Base Load and
cannot run a smelter or a big production company like a car company.
Perhaps this is true. But if we look at the beast from another direction we
see that homeowners and other roof top owners use 9 GW of energy
as their base load and 17 GW at peak time.

I believe that in time this entire 17 GW can be removed from the

grid, thus freeing up 17 GW for industries that need “Base Load.”
And government doesn’t need to borrow this money. And if it is done,
electricity provision will dramatically and quickly and sustainably increase,
giving the South African economy the impetus it needs to grow.

Regarding electricity losses by utilities and cities, the California Utility

CPUC has done research which shows that the total additional cost of
allowing these kinds of processes is ½ South African cent per kWh and
South African’s are already paying 3.5 cents levy per kWh. Hence the
fiscus is already getting the money to pay for any process losses.

Plus CPUC research shows that the grid is used much less in a Renewable
Energy environment and therefore transformers and other parts of the
grid last much longer and therefore maintenance is much lower. A
Service Fee is not required with Community Power Stations.
 8

Homeowners should be given the benefits that Big Electricity Users get,
for example Time of Use Tariffs, Rebates, Demand Response. And like
businesses homeowners should be able to invest in this new energy
system before tax and before VAT. Furthermore homeowners should be
incentivized in a similar way to buy Electric Vehicles, which can buy
electricity at off peak time and sell it at peak time. These moving batteries
also stabilize the grid. And better still why not install Photovoltaic
Generation systems on the houses so that people can charge their own
cars, thus giving even more electricity away to business to use for
creating jobs and paying more tax.

Regarding Nuclear the cost will be somewhere between R400 billion and
R1.4 trillion10 and it takes a lot longer to build than anticipated. Imagine if
you wanted to buy an air conditioner and the sales person told you it will
cost somewhere between R5,000 and R15,000 and will take somewhere
between 12 years and 20 years to install. Would you buy this air
conditioner?

Just think what can be done with this money. For example, a Renewable
Energy system needs big “Battery Banks” to store excess energy when
the wind is blowing or the sun is shining and no one needs the electricity.
It has been estimated that 7 GW of Pumped Storage like Steenbras Dam
near Cape Town, can be installed in Lesotho. Imagine how this would
revitalize that economy, and use South African labour, expertise and
capital. And Concentrated Solar Power with Storage is already Cheaper
than Nuclear and runs for 16 hours a day in Spain, e.g. from 6am till
10pm, more than covering South Africa’s peaks.

South Africa’s energy problems; and growth problems; and employment

problems; and environmental problems; can be solved by us working
together in a spirit of Ubuntu and Usuthu and Inkatha. Will the
Inkatha Freedom Party accept this challenge?

10
Flamanville Nuclear Power Station in France.